The Wall Street Journal is reporting that AT&T Wireless
Cost cutting, earnings concerns, and an ever-changing regulatory environment are recurring issues for telecommunications companies. Yesterday, the Fool analyzedVerizon's
Here's the real story. To accelerate the process of generating cash, AT&T Wireless is said to be considering outsourcing (a simple word meaning: "Let's get the job done more cheaply elsewhere"). It may be a winning strategy, but price cutting and special promotions are common in the wireless business. Today's savings through cost cutting may be given away in tomorrow's competitive pricing. Overall, the company's future is still not clear.
AT&T Wireless is hardly a value stock. With 2.7 billion shares outstanding and a market capitalization of $18 billion, the company's guidance of 8% revenue growth is hardly reassuring for a stock selling for 46 times earnings. Add in $10.6 billion in long-term debt, and there's a lot of risk at today's prices.
AT&T Wireless is one of the most widely held stocks by U.S. investors. It has taken shareholders on a wild rollercoaster ride since hitting an all-time high of $29.56 a month after its spin-off from AT&T
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W.D. Crotty can be reached at email@example.com.